Personal Wealth, Self-Employment, and Business Ownership

Aymeric Bellon; J. Anthony Cookson; Erik Gilje; Rawley Z. Heimer

doi:10.1093/rfs/hhab044

Review of Financial Studies Vol. 34 No. 8 2021

Personal Wealth, Self-Employment, and Business Ownership

Aymeric Bellon¹; J. Anthony Cookson²; Erik Gilje³; Rawley Z. Heimer⁴

¹ The Wharton School, University of Pennsylvania · ² Leeds School of Business, University of Colorado Boulder · ³ The Wharton School, University of Pennsylvania and NBER · ⁴ Carroll School of Management, Boston College

Abstract

We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.

DOI: 10.1093/rfs/hhab044
Volume: 34
Issue: 8
Pages: 3935-3975
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Personal Wealth, Self-Employment, and Business Ownership

Abstract

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